The UAE’s economy will grow by 3 per cent in 2012 despite global economic uncertainty and a recent dip in oil prices.

Speaking at a press conference in Dubai, the UAE’s Economy Minister Sultan bin Saeed al-Mansoori said the country had achieved real gross domestic product (GDP) growth of 4.2 per cent in 2011 driven by higher oil prices over the year.

“I would take around 3 per cent [real GDP growth] because the UAE is the most integrated Arab economy in the world economy. The world economy is not yet coming out of the economic crisis and this is going to affect some sectors of the UAE economy,” said Al-Mansoori

By contrast, in a report released on 16 May, the Washington-based IMF forecast the UAE’s economy to rise 2.3 per cent in 2012.

As the world’s fourth largest crude exporter, oil price fluctuations have a significant impact on GDP growth.  The Opec basket price dropped below $100 a barrel on 1 June, for the first time since October 2011, after averaging about $112 a barrel for the first four months of this year.

Asked about the UAE economy’s reliance on oil prices, Al-Mansoori said that “from a realistic point of view, $100 is the right price for oil. As long as it is hovering around $100 we are on the safe side”.

“There are many factors that affect the price of oil, but in my expectation it will hover between $80 and $100 and, depending on the world situation, it could go more than that,” he added.

The minister said that the embargo on financial transactions between the US and EU and Iran – a major trade partner of the UAE – was being felt by goods traders in Dubai.

“We have been affected by that, and if you talk to anyone in the trading community here they are complaining about it. They are being affected by it and they have nothing to do with it at the end of the day,” said Al-Mansoori.

“I for one am not 100 per cent for embargoes because at the end of the day you end up with the people in general being affected by it and, mostly, the poorest of the poor are affected by it,” he added.